A true value investor

The late Parag Parikh was a rare money manager who did not differentiate his interests from that of his investors

1954 - 2015

May 1, 2015, Friday morning. We are outside the Value Investor Conference at Mammel Hall, University of Nebraska, Omaha, waiting for William Thorndike to finish his presentation. Parag Parikh steps in a bit late — the first session is already in progress — but with a wide smile he heads straight to where we are sitting. It’s always a warm feeling to meet investors from India this time of the year at Omaha, and I have known Parikh for 16 years, ever since I started writing on the stock market and investing. Parikh frequently visited Omaha for Berkshire Hathaway’s annual meeting, and this being the 50th year of Berkshire under Warren Buffett, he could not have missed it. “Tomorrow is going to be exciting. I am really glad you guys are also here,” he says.

As we chat about Buffett’s virtues, we quickly gravitate to discussing Parikh’s entry into the mutual fund business. Parikh wound up his portfolio management services company and battling many an odd, created an asset management company with him and his employees as prime investors. This way, he ensured a perfect alignment of interest. Few fund managers in India invest in the funds that they manage — the common refrain is that as an individual investor, the fund manager has greater leeway in placing concentrated bets or buying into less liquid stocks.

Another cited reason: when you manage your money independently, you save the 2.5% fund management fee that you bear if you invest through the fund. Parikh rubbishes this defence often heard from fund managers, “That sort of thinking itself is wrong; if you think it is right for your investors, it should be right for you, too,” he says. That’s why Parikh launched only a single fund, where investment managers and investors were served the same cooking. 

We promise to catch up with him in Mumbai and take the discussion forward. Though that won’t happen anymore, we do hope another Parag Parikh will emerge soon. Someone who will eat his own cooking and create an investment vehicle that truly treats investors as partners — a philosophy Buffett lives by and Parikh, untimely, died with.